Is Your Credit Card Debt Getting the Best of You?

It’s easy for credit card debt to add up. Before long you could find yourself knee-deep in debt with no way out. Too much credit card debt and no way to pay it off can lead to poor credit, expensive monthly payments, and eventually bankruptcy.

Luckily, this can all be prevented, especially if you nip credit card debt in the bud before it gets the best of you. These warning signs are a few indicators that you’re headed for debt trouble:

• Your cards are maxed out. Credit cards that are at their limit—or very close to it—indicate you may be relying too heavily on credit for daily living expenses.

• You don’t know how much you actually owe. Ignorance isn’t always bliss, especially when it comes to your finances. If you don’t know how much credit card debt you actually have, you have no way of knowing when it starts to get out of hand.

• You use your credit to buy things you can’t really afford. You really want a new living room set but can’t afford to pay cash for it, so you charge it to your credit card. This type of spending gets people in credit card trouble all the time. When you make purchases with credit cards and pay the balance down slowly, you end up spending hundreds or thousands more on your purchases.

• You don’t have a debt reduction plan. If paying off your debt isn’t a priority for you, you’ll be in debt for years. This also means expensive interest payments.

• You only pay the minimum payment. Paying only the minimum payment on your credit cards will keep you in debt for years. For example, if you have a credit card with a $1,000 balance and pay only the minimum amount each month, it will take you over 9 years to pay off.

• You can no longer afford the minimum payments. If you can’t afford to make the minimum payments on your cards, your credit is out of control.

Taking control of credit card debt

If one or more of these warning signs apply to you, don’t panic. You can still take control of your debt if you:

• Stop charging purchases to your credit cards. Take the cards out of your wallet or purse, and put them somewhere you cannot access them on the spur of the moment. Often, if we are unable to purchase an item immediately, we find that, after a cooling-off period, we don’t really need that item
• Start keeping track of where your money is being spent.  Remember to include everything family members spend money on — even the small things.
• After a couple of months of keeping track, establish a family budget, using the information you have learned from keeping track of expenses. 
• Set some family priorities for spending. If you have joint goals, it will make it easier for the entire family to keep on track with your budget.
• Make sure that one of your goals is to pay down debt. Based on your budget and needs, determine how long it will take to pay off the high-interest credit card debt that you carry.
• Begin to pay more than the minimum payment each month on your credit card debt. If you only pay the minimum each month, the growth of the debt will continue to outpace your ability to pay it off.

Deciding when it is time to get professional help and advice

You will need to decide whether paying off your credit card debt on your own, with careful budgeting, will work for you. Depending on the length of time it may take you to pay the existing credit card debt off, you may be paying far more over a period of years than the value of your original purchases. Remember, credit card debt grows every month, even when you are no longer using the credit card. As long as you are not paying off the full balance, you are incurring interest charges every month.  

Generally, if it will take more than 2 years to pay off credit card debt, it is advisable to seek professional help. There are a number of good options available to help you eliminate the debt and move on with a life free of debt. A free consultation with a Licensed Insolvency Trustee, such as LCTaylor, can help you determine what your options are and what solution will work out best for you and your family.  

Tune in to this podcast where our Licensed Insolvency Trustee, Jillian Taylor Mancusi, explains how credit card works. 

If your credit card debt has already gotten the best of you, you may need to seek professional help. A free consultation with a licensed insolvency trustee can help you decide the best way to get out of debt and take control of your finances.

Jillian Taylor-Mancusi, LIT

Jillian has worked in the insolvency field since 1992. She is a graduate of the University of Manitoba. She received her Insolvency Counselor’s Qualification Certificate from Ryerson Polytechnic University in 1998, and in 2007 she attained her license as a Licensed Insolvency Trustee. Jillian is a Read More Jillian has worked in the insolvency field since 1992. She is a graduate of the University of Manitoba. She received her Insolvency Counselor’s Qualification Certificate from Ryerson Polytechnic University in 1998, and in 2007 she attained her license as a Licensed Insolvency Trustee. Jillian is a member of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). She is Past President of the Manitoba Association of Insolvency and Restructuring Professionals (MAIRP).Jillian has held positions on the Armstrong Point Association, Executive of her local EDA Riding Association, Manitoba Highland Dance Association, and the Continuing Education Committee of CAIRP. Previously, Jillian was the Treasurer for the Parent Association at her daughter’s school. Currently, Jillian serves as the Chair for Dressage Winnipeg. Close